CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
While many Central Banks get on their Central Bank Digital Currency (CBDC) trip, different jurisdictions have different priorities, and a variety of design choices can deal with individual nation choices and have implications for interoperability and cross-border payments. For instance, the United States (US) have expressed their intent to assess CBDC on its capability to enhance the payment system. The European Central Bank (ECB) has emphasised the prospective for a digital Euro to additionally improve the digital economy and support European sovereignty and stability. The ECB, Bank of Japan, Bank of Canada and Sveriges Riksbank emphasize the possibility of declining cash use and the need for inexpensive, low-risk, and effective cash- like CBDC design. Japan likewise emphasises the stability and effectiveness of payment and settlement systems, together with global accessibility, immediate payment ability, and interoperability, as requirements of the CBDC.
In reacting to the worldwide increase in using digital payment solutions and the cryptocurrency market, the Central Bank of Nigeria (CBN) has introduced the eNaira, in a project described as "Project Giant", which was launched on 25 October 2021. In facilitation of this, the CBN involved a global fintech organization Bitt Inc, as the technical partner for the development of the digital currency. With this introduction, Nigeria, Africa's biggest economy concerning GDP and the continent's most populated country (more than 200 million people), is a pioneer on the continent, along with Ghana, which has been trying her e-Cedi as another method for exchange since September.
The new currency can be accessed and utilized through the eNaira wallet (called Speed), a digital storage held and managed on a distributed ledger. The wallet is readily available for download through app shops like Google Play Store and Apple App Store (Michael Ajifowoke 2021).
Unlike digital banking which includes clients transacting with cash maintained by them in a bank, eNaira is real cash earned and maintained by clients in their e-wallets. As a result, clients will have the ability to transact with it like fiat currency without the involvement of intermediaries as is the case with digital banking. The removal of the intermediaries is anticipated to lower the cost and time of transactions. Additionally, cross-border transactions are anticipated to become easier. It likewise offers a chance for unbanked Nigerians to transact with eNaira without a personal bank account (Seun and Eustace, 2021).
Before central bank digital currencies, the only method customers might use cash that is a direct liability of a central bank was with physical money. Existing digital retail payment from client deposits accounts in financial institutions are based upon cash that is the liability of the institution offering the account, not a central bank. A central bank digital currency is a direct liability on the central bank and is offered to all households and companies providing access to digital central bank money. It can be moved or exchanged using technologies such as blockchain. Blockchain is a system of keeping records of transactions across a network of computer systems (The Discussion, 2021).
CBDCs can likewise aid in enhancing remittances, foster cross border trade, enhance financial inclusion, make financial policy more efficient, and allow the government to send out direct payments to citizens eligible for particular welfare programmes (Obinna Chima, 2021). It is pertinent to understand that Nigeria is a heavy beneficiary of remittances, commanding one of the greatest numbers of Diaspora transfers on the planet. The eNaira will no doubt play a bigger role here. The president guaranteed Nigerians of the security and scalability of the CBDC. He revealed that the journey to produce a digital currency for Nigeria started in 2017. According to him, work intensified over the past several months with a number of brainstorming exercises, deployment of technical partners and advisors, partnership with the Ministries of Communication and Digital Economy and its sister agencies like the Nigerian Communications Commission (NCC), integration of banking software throughout the nation and painstaking examinations to guarantee the robustness, safety and scalability of the CBDC System. With the digital currency, local or international transfers can happen nearly immediately and need a lot lower fees compared to the conventional system. It would certainly significantly minimise the task of confirming funds or risk-monitoring in each banking platform, since CBDCs are the real fiat currencies in digital form. Likewise, the reduction of fees at faster transfer rates that include the initiative, also promotes economic growth and benefit lower classes with low payment fees and higher accessibility to funds (Obinna Chima, 2021).
In conclusion, for eNaira project to be successful, a great number of Nigerians (consisting of firms and government agencies) will need to preserve e-wallets. Nonetheless, eNaira will be troubled by a few of the current problems of the nation including illiteracy, lack of power, lack of internet coverage, and the volatility of the Nigerian currency. However the arrangements of the Presentation are tentative as the CBN is yet to provide a prepare guideline or structure on the operation of eNaira, this project seems a step in the right direction to accomplishing a cashless economy. There are also hopes (however there is no sign of the strength of this) that the guidelines of the CBN will create an opportunity for the operation of cryptocurrency and virtual currencies in Nigeria. It is against this backdrop that this study aims to examine the knowledge, perception and acceptance of the e-naira in Nigeria.
1.2 Statement of the Problem
Nigeria as a nation ended up being the first country in Africa to introduce digital currency known as e-naira to the world. Although, there are lots of challenges that might come with this in the meantime. Nevertheless, Nigeria really pull this off, provided the technology facilities and the technological knowledge are in place. It is specified that the eNaira will be provided by the central bank through the Digital Currency Management System to mint and issue eNaira however it appears this system has been developed by Bitt, a global financial technology company. It offers digital currency and stable coin solutions to central banks, banks and ecosystem participants around the world. Because of this, the maintenance of the eNaira system would certainly very much be dependent on the technological strength of this firm and the degree to which they are retained to offer a maintenance structure for the system.
Another difficulty is the electricity crisis and absence of widespread access to the internet throughout the nation. These ought to be immediate concerns of the Central Bank, and the government, to deal with for the eNaira system to be successful. It is good to see that there is a plan for the system to be functional while offline.
Also, the poor might have difficulty in accessing the eNaira system where it is the difficulty of attaining digital identity which is an additional difficulty that this new system might deal with. The eNaira develop strategies to utilize the existing Bank Verification Number and National Identification Number regime. Getting the documents required for these is costly and cumbersome.
As Nigeria has the largest population on the continent, spearheading this procedure might indicate the beginning of a regional financial integration. If central bank digital currency arrangements could work together across the continent it might address the obstacle of the inconvertibility of African currencies. This might aid intraregional trade, which has been challenging to accomplish in Africa. With the African Continental Free Trade agreement currently functional, the successful launch of the eNaira might be an action to regional financial integration in Africa and possibly a regional central bank digital currency (The Conversation, 2021).
1.3 Objectives of the Study
The general aim of this study is to examine the knowledge, perception and acceptance of the e-naira in Nigeria. The specific objectives therefore include:
i) To determine the reasons behind the introduction of e-naira by the government
ii) To examine the impact of e-naira on the economy of Nigeria
iii) To understand the benefits of e-naira to Nigerians
iv) To investigate the challenges that may confront e-naira in Nigeria
1.4 Research Questions
The followings statements will be considered as the research questions for this study:
i) What are the reasons for the introduction of e-naira by the government?
ii) What is the impact of e-naira on the economy of Nigeria?
iii) What are the benefits of e-naira to Nigerians?
iv) What are the challenges that may confront e-naira in Nigeria?
1.5 Research Hypotheses
The following is considered as the research hypotheses for this study:
i) There is significant relationship between e-naira and the economy of Nigeria
ii) There is no significant benefits of e-naira on Nigerians
1.6 Significance of the Study
This study will beneficial in a number on ways especially to the government as it will help them to understand the significant of digital currency to the economic growth of the country. It will as well help them to understand better the value of naira to other currencies of the world.
It will help the social scientists and the business people to know the wave of digital currency in to the economy with its attendant effects propel the study of this nature to help in understanding better the study of new concepts.
It will also help researchers in the sense that it will serve as the foundation of knowledge upon which other research works in this direction can be founded.
1.7 Scope of the Study
The study focuses on the knowledge, perception and acceptance of the e-naira by Nigerians.
